India Textile Sector

Syllabus: Textile Industry

Source: TH

Context: The Indian textile industry, which was estimated at $153 billion in 2021, has recently faced challenges, impacting its growth and export potential. Although aiming for a $350 billion target by 2030, the industry has experienced a slump due to various economic and geopolitical factors.

Current status of the textile sector:

• Market size: The Indian textile and apparel industry was valued at $153 billion in 2021, with $110 billion coming from the domestic market.

• Global position: India is the third-largest textile exporter in the world, holding a 5.4% share of the global market.

• Employment: The sector employs about 105 million people directly and indirectly, making it one of the largest employment generators in the country.

• Economic contribution: The textile industry contributes around 2.3% to India’s GDP and accounts for 10.6% of the total manufacturing Gross Value Added (GVA) as of FY23.

• Production clusters: Major textile hubs like Tamil Nadu, Gujarat, and Maharashtra are crucial for spinning and garment manufacturing, with Tiruppur being a key knitwear production center.

• Recent performance: FY22 saw growth with exports reaching $43.4 billion; however, there has been a notable decline in both domestic demand and exports in FY23 and FY24.

Reasons behind the slump in the textile sector:

• Global economic slowdown: Geopolitical issues and reduced demand from international markets have severely impacted India’s textile exports.

• High raw material costs: Increased prices of cotton and Man Made Fibres (MMF) have led to higher production costs, making Indian products less competitive.

• Import duties: The 10% import duty on cotton has made domestic cotton more expensive than global prices, further hampering the industry’s competitiveness.

• Supply chain disruptions: Quality control orders on MMF and supply chain bottlenecks have affected raw material availability and price stability.

Other challenges in the textile sector

• E-commerce and retail shift: Direct retailing through e-commerce has disrupted traditional business systems, impacting small-scale manufacturers.

• Changing consumer preferences: Increased demand for comfort wear and sustainable fashion has led to a decline in demand for conventional textile products.

• Sustainability and ESG compliance: Foreign brands are increasingly adopting ESG (Environmental, Social, and Governance) sustainability, pressuring Indian manufacturers to meet strict compliance standards.

• Labour costs: Rising labour costs in the textile sector are affecting overall production expenses, prompting the need for technological interventions to enhance productivity.

Government schemes in the textile sector:

• Amended Technology Upgradation Fund Scheme (ATUFS): Supports technology upgradation in textiles with financial incentives. Aims to improve production capabilities and boost employment.

• Supports technology upgradation in textiles with financial incentives.

• Aims to improve production capabilities and boost employment.

• Scheme for Integrated Textile Parks (SITP): Provides world-class infrastructure for textile units in clusters. Enhances competitiveness and efficiency of the textile industry.

• Provides world-class infrastructure for textile units in clusters.

• Enhances competitiveness and efficiency of the textile industry.

• SAMARTH Scheme (Scheme for Capacity Building in Textiles Sector): Focuses on skill development, targeting 10 lakh people in textile-related jobs. Aims to bridge the skill gap in the organized and traditional sectors.

• Focuses on skill development, targeting 10 lakh people in textile-related jobs.

• Aims to bridge the skill gap in the organized and traditional sectors.

• Power-Tex India: Aims to strengthen the power loom sector through technology upgrades. Provides subsidies for modernization and market expansion.

• Aims to strengthen the power loom sector through technology upgrades.

• Provides subsidies for modernization and market expansion.

• Silk Samagra Scheme: Integrated program to promote silk production and quality improvement. Supports R&D, seed production, and market promotion in the silk industry.

• Integrated program to promote silk production and quality improvement.

• Supports R&D, seed production, and market promotion in the silk industry.

• PM-MITRA (Mega Integrated Textile Region and Apparel Parks): Aims to create world-class industrial infrastructure for the textile industry. Establishes integrated textile parks to attract investments and boost exports.

• Aims to create world-class industrial infrastructure for the textile industry.

• Establishes integrated textile parks to attract investments and boost exports.

Way ahead for the textile sector

• Policy interventions: Remove or reduce the import duty on cotton during off-season months to stabilize raw material prices.

• Investment in technology: Invest in modern technologies and innovations to improve production efficiency and reduce wastages.

• Skilling and workforce development: Upskill the workforce to align with the changing demands of the global market.

• Sustainability initiatives: Promote the adoption of sustainable practices in manufacturing and supply chains to meet international standards.

• Market diversification: Explore new markets and diversify exports to reduce dependency on traditional markets.

Insta Links:

• Production-linked-incentive

• PM Mitra scheme

Consider the following statements: (UPSC – 2020)

1.The value of Indo-Sri Lanka trade has consistently increased in the last decade.

1.“Textile and textile articles” constitute an important item of trade between India and Bangladesh.

1.In the last five years, Nepal has been the largest trading partner of India in South Asia.

Which of the statements given above is/are correct?

(a) 1 and 2 only (b) 2 only (c) 3 only (d) 1, 2 and 3

Answer: b)

1.Analyse the factors for highly decentralized cotton textile industry in India. (UPSC – 2013)